Last updated: Don’t look now: Why some CX programs are fading to black

Don’t look now: Why some CX programs are fading to black


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If this is the Age of the Customer, how could CX programs possibly go away?

A recent Forrester report predicts 2023 will be a “year of reckoning” for customer experience efforts with one in five disappearing and only one in 10 going stronger than ever.

The analyst firm says economic, supply chain, and continuing pandemic distractions will be to blame.

“The challenges of 2022 — when companies lost their customer focus amid rising customer expectations and a worsening economy — will create an inflection point for customer experience (CX) programs in 2023,” wrote Forrester VP and Research Director Rick Parrish.

“CX programs that help their organizations achieve their brand aspirations — and have the data to prove it — will thrive despite corporate belt-tightening. Other programs will wither since they’ll no longer have a strong economy to buoy them.”

Failing economy puts CX programs at risk

Not long ago, the idea of scrapping CX programs would have seemed blasphemous. Forrester itself coined the phrase “Age of the Customer” to reflect how digital technology has empowered consumers to be more selective in buying decisions and, therefore, more empowered.

This gave way to more than two-thirds of marketers competing primarily on customer experience instead of cost or product

But when economies stumble, marketing programs are often first to feel the pinch. Indeed, some companies – especially in high tech- have let thousands of sales and marketing professionals go in recent months.

Not surprisingly, dedicated CX officers and programs have been swept up in that and are predicted to be split up or absorbed into other business functions.

“I don’t think CX is going away; it’s just becoming integrated into various departments because it isn’t monolithic,” says Tal Klein, chief marketing officer for Relay Network, a software-as-a-service company.

5 reasons why brands need to stop the fade

The down economy will only put more emphasis on customer experience as customers look for brands that they feel confident in and provide worthwhile experiences.

Here are five key reasons why letting CX programs disappear would be short sighted:
  1. CX programs drive growth
  2. CX delivers the personalization customers want
  3. CX builds customer lifetime loyalty (CLV)
  4. CX encourages brand advocacy
  5. CX bridges the physical-digital divide

CX programs: Retrenching vs. doubling-down for growth

When economies falter, companies typically take one of two approaches. Some hunker down, cut costs, and hope to survive. Others, remain focused on investing in differentiators like CX to drive continued growth and boost profitability.

The importance of CX for key metrics like churn, retention, loyalty, new sales and competitive differentiation is well established, says Jaime Punishill, CMO for nCino, a cloud banking software company. “Not investing in customer experience is basically saying you’re willing to let those metrics falter.”

Brands that invest in CX are better positioned to outflank the competition, he says.

“In every downturn, you see companies retrench on things that other companies double-down on,” he says. “Then, five years later, we’re writing the story about how companies doubled-down on key differentiators and outperformed everyone else.”

However, business leaders have been known to lose faith and de-fund CX efforts because they aren’t seeing clear and compelling evidence of improved sales or customer sentiment.

Megan Heuer, CMO of Aite-Novarica Group, an industry analyst firm, says that can be a sign the programs aren’t aligned to business priorities. Some CX programs put themselves at risk because they never prove business impact.

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“It may be because they’re not focused on key performance metrics, like profitability, retention and revenue growth. Others may have been designed without real connection to customer impact and value.

If that’s why a CX program gets cut, a company should use the pause to rebuild their CX strategy, she added.

CX delivers the personalized touch

Personalization has been part of CX for years. We’ve all seen studies indicating customers expect brands they patronize to demonstrate they know them on a personal level, and we know most get very frustrated if that doesn’t happen.

The trouble with personalization is that everyone thinks they’re doing it – and doing it well. Not true. Personalization isn’t just about putting someone’s name on a popup add, email, or text message. It’s about doing the grunt work to learn what customers care about in the moment.

It includes having a golden record that can be shared across an organization so every frontline worker interacting with people knows their history, experience, and opinion of the brand. Yet, customers don’t get it from every brand engaging with them.

Because of this, there are numerous reports talking about how personalization is a myth, how it’s been overhyped, and is now table stakes – and therefore less important.

But Nigel Piper, executive general manager of customer experience for Xero, an online accounting software company, says personalization is more relevant than ever if executed properly.

“People’s expectations have gotten higher rather than lower over the last few years in terms of the experiences that they want,” he says. “They want the information you have about them to be private, confidential and protected. But they also certainly want you to use the information to deliver more personalized experiences than they’ve seen in the past.”

Building valuable customer relationships

CLV is defined as the measure of total income a brand can expect to receive from a typical customer for as long as they’re patronizing the company.

It’s considered an important metric, especially in a tough economy, because it costs five times more to acquire new customers than to keep existing ones happy and loyal.

“It stands to reason that a better customer experience increases CLV,” says Relay Network’s Klein. “Better experiences lead to additional spending, greater product utilization, and elevated sentiment. An investment in CX enhances CLV which, in turn, lowers customer acquisition costs. It’s a no-brainer.”

Jonathan Allan, CMO of Puzzel, a customer service platform, agrees.

“Loyalty is transactional and driven by the experiences we all receive,” he says. “Only brands with CX at their heart will retain and grow their customer bases.”

CX programs cultivate brand advocates

Any economic pressures leading brands and marketers to ditch CX programs will convince loyal customers to shift loyalty to brands still offering richer and more experiences, says Mark Nardone, CMO of PAN Communications, an integrated marketing and PR agency.

“Doubling down on experiences when they need them most can be the difference between a satisfied customer and an engaged advocate,” he says. “Before you pull the plug on a CX program, ask yourself: do you want to be one of a dozen brands that leaves customers hanging or the one that’s there for them when no one else is?”

By cutting effective CX efforts, companies run the risk of losing loyal voices that have been supporting the brand and helping it grow much-needed long-term revenues, Nardone adds.

Bridging the physical and digital divide

During the pandemic, the vast majority of CX programs related to the digital realm. But as people emerged from quarantine and returned to physical outlets, an odd thing happened: their great online experiences weren’t as readily found in the real world.

If CX programs were to vanish, marketers would have difficulty extending their good work from digital to physical locations, resulting in disillusioned customers going elsewhere.

CMOs, it seems, are generally aware of this. In fact, in a recent CMO Council report, sponsored by SAS, 67% of marketers say it’s either extremely important or very important to delivery hybrid experiences.

“Digital engagement has led to higher customer expectations, bigger demands and about a million more choices if one brand doesn’t deliver,” says Tom Kaneshige, chief content officer for the CMO Council.

“Marketers are scrambling to get the data they need to meet customer expectations. Chances are your CX strategy is crying out for a modern makeover.”

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